The statistical definition and measurment of the informal sector

Michael Frosch

frosch@ilo.org

2´nd October 2019

Resolution concerning the International

Classification of Status inEmployment (ICSE-93)

(15th ICLS, 1993)

ILO Statistical framework

Resolution concerning statistics of

employment in the informal sector (15th

ICLS, 1993)

Guidelines concerning a statistical definition of informal employment

(17th ICLS, 2003)

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Employment

(Employment in) Informal sector

Informal employment

Resolution concerning statistics of the

economically active population(13th ICLS,

1982)

ICSE-93

Resolution concerning statistics on work

relationships (20th ICLS, 2018)

Measuring informality: A statistical manual on the informal sector and informal employment

(ILO, 2013)

Resolution concerning statistics of work, employment and

labour underutilization (19th ICLS, 2013)

WorkICSaW-18ICSE-18

Resolution concerning decent work and the

informal economy (ILO, 2002)

Recommendation concerning the

transition from the informal to the formal

economy(ILC R204, 2015)

2015, Informal employment SDG Indicator 8.3.1 as part of SDG goal 8 to promote sustained, inclusive and sustainable economic growth, full and

productive employment and decent work for all

The informal sectorResolution concerning statistics of employment in the informal sector (15th ICLS, 1993)

Conceptual definition of the informal sector

– “The informal sector may be broadly characterized as consisting of units engaged in the production of goods or services with the primary objective of generating employment and incomes to the persons concerned”

Market oriented

Low level of organization

– “These units typically operate at a low level of organization, with little or no division between labour and capital as factors of production and on a small scale”

Have the same characteristics as households

– “The fixed and other assets used do not belong to the production units as such but to their owners. The units as such cannot engage in transactions or enter into contracts with other units, nor incur liabilities, on their own behalf”

Operational definition

Household enterprises in the household sector (SNA 2008)

Excludes:

• Government units and non-profit organisations

• Incorporated enterprises

• Quasi-corporations

Having some market production

Excludes:

• Production exclusively for own final use

Informal household market enterprises

• Size of the unit below a specified threshold: or/and

• Not registered under specific forms of national legislation

• Factories’/ commercial acts

• Tax (fiscal legislation)/Social security laws

• Professional groups’ regulatory acts, etc.

• Should be national

Criterion: Legal organization (institutional sector,

incorporation) +

Criterion: Not having a

complete set of account +

Criterion: Have some market production +

Household market enterprises

Criterion: Not registered

Or criterion: Below a certain size. (Not recommended)

Component: Employment in the informal sector

• Employment in the informal sector = all persons employed with at

least one job in an informal household market enterprise

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Measuring the informal sector

Traditional sources are problematic

• Business registers:– Informal sector enterprises are typically un-registered

by definition, thus not included in the business registers

• Establishment surveys:– Tend to exclude economic units that

• Have few employees

• Are not registered

• Have no ”visible” premises

All characteristics of informal sector units

Mixed surveys Collect detailed information about households and enterprises

Are carried out in two phases:o Phase 1: Household survey phase (economic activities of their

members) identifies informal sector entrepreneurs o Their number and characteristics

o Phase 2: Enterprise survey phase obtains information about enterprises owned and operated by informal sector entrepreneurso Type of prodcution, income generation, costs etc

• ILO have started to develop tools for mixed surveys but more work is needed

• In particular further development on the second phase questionnaire

Revising the standards for statistics on informality

Revising the statistical standards• ILO was mandated by the 20th ICLS to revise the standards for statistics

on informality:

• Align the standards to: – 19th ICLS resolution I concerning statistics of work, employment and labour

underutilization – 20th ICLS resolution I concerning statistics on work relationships

• Based on country practices – Improve and strengthening the statistical definition of informal sector and

informal employment

• Meeting the users data needs, both from the perspective of labour statistics as well as economic statistics

• The objective is to create a new set of standards based on current definitions and country practices, aligned to the most recent statistical labour standards and that contributes to an increased global coverage and harmonization.

Timeline

• A WG that will support ILO in developing a new standard has been establish:– Representatives from countries, organizations,

workers and employers

– Meet yearly between 2019-2022

• 2022: A series of regional meeting will be held

• Beginning 2023: Tripartite Meeting of Experts

• 2023: The new proposal will be presented and discussed at the 21´st ICLS